What Did Duterte Say in his 2nd SONA that Will Impact Business and the Economy?

President Rodrigo Duterte delivered his second State of the Nation Address (SONA) before the 17th Congress for about two hours, around half an hour longer than his first last year. In the course of a long speech punctuated by occasional curses and attacks against his perceived enemies, he also discussed a number of measures that will impact business and the economy.

Passage of National Land Use Act and Limit Mining Areas

The President called on legislators to pass the National Land Use Act or NALUA as he lamented impact of global warming in Mindanao and the destructive effects of mining in the country.

"Given the fact that Mindanao is unusually warming, I ask all agencies involved in food production to look into this and act accordingly. Also, I am appealing to all our legislators to immediately pass the National Land Use Act or NALUA to ensure the rationale of sustainable use of our land," Duterte said.

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The NALUA seeks to institutionalize the categorization of land resource in the country into four, namely: protection, production, settlement development and infrastructure development.

Former President Benigno Aquino III similarly asked the previous Congress to treat the legislation as urgent, after it was left untouched for two decades.

Duterte also warned the mining industry, one of the sectors likely to be affected by the legislation if ever passed, to do their business properly.

“Declare your [mining industry] correct income. Your failure to do so will lead to your ruin,” the President said.

Amend the Procurement Law to Reduce Project Delays

The President also urged Congress to review the Government Procurement Reform Act as he lamented the lengthy processes involved in doing business with the government.

“Let us trim the excess fat and add more muscle through the expeditious passage of the act rightsizing the national government,” he said.

On Monday, July 17, President Duterte signed Executive Order No. 34, which authorizes the heads of government agencies handling projects to use alternative methods of procurement if such conditions are available. This would allow government heads to proceed with procurement processes even without seeking approval from the Government Procurement Policy Board (GPPB).

The Order amended former President Gloria Macapagal Arroyo’s EO No. 423 series of 2005, which laid out implementing rules and regulations regarding the procurement process.

Approve the Tax Reform Package

The President also asked the Senate to approve the Tax Reform for Acceleration and Inclusion Act (TRAIN), which seeks to cut personal income taxes while increasing taxes on fuel, cars and sweetened beverages, to name a few. These provisions seek to offset the expected government revenue losses from the removal of personal income tax to employees earning Php30,000 and below a month.

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“I call on the Senate to approve the tax reform in full and without haste,” President Duterte said. “The poor and the vulnerable are at the heart of my tax reform. Your support will ensure that the benefits of the tax reform can be felt immediately by them.”

The House of Representatives passed the bill on third and final reading in late May. The bill is also needed to finance the administration’s ambitious infrastructure projects, which would cost almost Php8 trillion.

As he spoke about taxes, the President also said that he has asked the Department of Finance and Bureau of Internal Revenue to accept the Php25-billion worth of tax settlement offered by tobacco company Mighty Corp., which is facing charges of tax evasion.

“After the settlement, Mighty will no longer do any business. This will be the largest tax settlement on record,” he said. “It can produce a windfall for the government which is significant as we rebuild Marawi and Ormoc.”

The company is facing almost Php38 billion worth of tax charges after it was found to be using fake excise tax stamps on its cigarette packs in March 2017.

JT International Philippines (JTI), the company behind American Spirit, Winston and Mevius, announced early this month that it will acquire Mighty Corp. in a deal worth Php45 billion.

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Elyssa Christine Lopez is a staff writer of Entrepreneur PH. Follow her on Twitter @elyssalopz

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